The early days of car-sharing
Interview with Carsten Petersen
DJ: Does car-sharing work in all situations?
CP: STATTAUTO has tried doing car-sharing in the outer areas of Berlin. In Spandau. Twice. Some people there want it, but we weren't able to get enough... you need at least 30 people to open a station [of 2 cars and a check-out system]. Why? Where public transit is not good, people have difficulty getting to work in a reasonable time. In this case, you just can't do car-sharing. Maybe then you should switch over to the political level to establish a good public transport system.
DJ: At what point did you add bus passes?
CP: In 1991, when we got the new safe system. In the beginning, we only had a normal safe system that could be used with a key. After that we had about 500 people and figured it would become too anonymous. So we developed the safe system with the [magnetic] access card... here, I'll show you the mobile card. One side was our side and for paying taxi rides; the other side was for bus pass stickers.
Interviews with Carsten Petersen & Markus Petersen,
founders of Europe's first and largest car-sharing firm,
By Danielle Janes & Greg Bryant
(representing both the Eugene Car Co-op & RAIN)
RAIN 15-1, 1994
Thousands of carsharing members in Europe have opted out of the hassle and expense of private car ownership. Instead, they pay only for the time they actually drive. They use neighborhood-based carsharing vehicles when they need to drive. Ten to twenty members share each car. They end up driving less, thereby helping the environment. Parking demand is also reduced.
Above: Carsten Petersen Below: A typical carsharing station's key access box mounted on the side of a building. A magnetic membership card and key allow access to a locked drawer that contains all the station's car keys. After a drive, you put your time/mileage logsheet in the STATTAUTO mailbox.
In the beginning, we took out 11% loans from the banks. So 4.5% is a lot less and it is much better for us. And there is a political movement against banks in Germany because of their involvement in arms and war. We are kind of a green bank. People know it is better to give their money to STATTAUTO because of the members' association and because the financial books are very open.
DJ: How is STATTAUTO structured?
CP: As a GMBH, which is like a limited corporation. If STATTAUTO does some big mistake like not filling the brake fluid, any lawsuit would be paid by the company, not individuals. With 130 cars, things happen. In Germany, limited corporations must have 50,000DM for protection to use to pay off any harmed party... you don't have that in the U.S.? (DJ:) No. (CP:) Well, that is pretty unsafe for the public! This corporation is owned completely by me and Markus. Users have a Registered Association, and they can be a member of that. You can be a participant in the corporation and a member in the association. If you're a member in the association, you can vote in the yearly meeting, and make general decisions monthly. You decide important questions like: what cars we want, how/if we take on a food delivery service because it costs money and I have to organize it and it takes time and everything. Some said no on the delivery service because it might take business from neighborhood stores, but others wanted it because of the organically-grown food.
There is a contract between the corporation and the association and in this contract are 3 essentials:
1. Open books for the association monthly and yearly.
2. The corporation may not change the prices and the kind of usage without asking the member association.
3. No part of the corporation is to be sold without asking the association.
So they have pretty big rights in the corporation. We think this is important. They are better with our cars then with a rental agency like Hertz's or Europcar's cars.
Only about 1/4 of the participants are members of the association. Total association membership is 400. At the last annual meeting there were 80. At the monthly meeting, 10-12 really interested members attend: those that often work in transport or political, green party activity. So you see the interest is not too big. For the members it is important to have the security that they could look in the corporation's books. But they never do. This is a virtual thing. But they have more rights.
DJ: How quickly can I become a member?
CP: You could phone and there is an answering machine where you can leave your name and address. And then we send you a letter. The first step is we send you a letter and a brochure. Then you know how the system works and where the stations are. Every week, we have 2 days when people can come to a meeting to learn about the system. Which takes about an hour. There are always about 10 to 20 new people who come, and they learn about everything and the next day they can start using the cars.
DJ: Can I come to your office and join any day?
CP: No, you always must come to one of the twice a week meetings to join. Because we don't want to have to explain it all day. We have other work, so we only have 2 days a week. In the beginning, it is not as convenient as other rental agencies, but then after the first meeting you never have to come again. You only have to come once. And then it is much more convenient, of course.
"We are kind of a green bank."
DJ: Do you get the pass in the mail if you're a member?
CP: No, not yet. Right now it's basically a symbol that connects the two. We could buy 2000 bus pass stickers to give to our members, which would be economical for the bus company. But BVG is really an elephant, so maybe next year.
DJ: So not all the members have the bus pass sticker?
CP: I don't know. In the summer, some people don't get a pass. Anyway, then we step by step added the taxi and trains to the Mobile card.
DJ: Does that mean members get billed monthly for their taxi use? What can you do with the Mobile card?
CP: You can use STATTAUTO, get a BVG bus pass, ride in a taxi, get railway tickets by phone and charge it to your Mobile card. In autumn 1995, we will have another thing: a delivery system by which you can get food delivered from the grocery store. Many people did not want to join STATTAUTO because they wanted to drive to shop for food. Many parents can't carry all the food by bus or foot. But the delivery service will be only for organically grown (Biological) food, and only food that comes from the local region. This comes from special shops here called Brandenburg shops, created by an organization that helped local farmers after the falling of the wall. Also, we wanted to increase awareness that buying local food helps the environment.
DJ: Tell me about the requirement that members not own cars.
CP: In the beginning, we said that only members could join if they did not own a car. This was to avoid people having more cars than they had before joining. Everyone, especially the media, was very interested in that point. In the contract, people had to say that they don't own a car. Everyone thought his was an important ecological and political point and we were very fond of the point because everyone applauded that point. But after a year we realized it was really an idiotic point, because if you own a car, why would you pay 10DM per month to use another one? So you must not forbid it... it's an empty law. We gave up the point. I realized that everyone was so fond of this point, that moral systems are in a way very strong and but also completely useless. People love to be moral even if there is no point to it. It is really strange. So we changed our marketing. We stopped saying you have to get rid of something, and started to say we offer you something.
Our segment in the market really changed from the beginning when we had very ecologically advanced people, young, highly educated, who really thought about things. And now we are getting to the more normal people. We really have to do that, because ecological people usually don't have a car anyway. So we really want normal people. We just want to reduce the cars.
DJ: So if I were to become a member, what kind educational outreach do you do?
CP: The education is done by economic forces. If you're a member, you will use the car when you need it. You will see on your bill that one drive is pretty expensive, and not driving is cheap. If you own a private car, it is just the other way around: car owning is pretty expensive and car driving is cheap. Most of the costs of the car is in buying it, losing the worth, paying taxes, and insurance. The most important thing is the loss of worth each month. If you buy a car it loses 300DM in one month, just being parked. You have 300DM less in one month. And you can drive pretty far with STATTAUTO for 300DM... and you don't have the stress, you don't go to the garage, you don't do anything. You just drive. When you drive it is pretty expensive but when you go by bus it is very cheap. So after you get your first STATTAUTO bill, people who had private cars will phone and say I never thought that STATTAUTO was so expensive! We tell them, we told you and you had the price list and car driving is a luxury. Drive less and you'll pay less... and then they do. This is the educational process.
DJ: So, no education about bus or train schedules?
CP: No. We don't have time. There people in Cologne do this, but they get money from the city. And it is really not necessary. Why should the people call you if there are bus and train employees whose job it is to tell you the schedule?
DJ: Tell us about your members' group.
CP: They don't do very much. Sometimes they have monthly meetings, but last month, they didn't meet. We had a meeting for all of them four weeks ago, because we have a contract with the users that when we change prices we have to ask them. And once a year, we ask them and then it is always a big discussion.
DJ: Do you lose members every time you raise prices?
CP: Yes, because there are 3 possibilities to raise prices. Either you raise 1) membership fees, 2) time charges or 3) kilometer charges. Every year you hit somebody too hard. This year we raised the membership fees and now people are quitting who drive very, very little. They are members because they want just the possibility of using the cars. Of course this possibility is worth something, but if the price goes up...
The new membership fee is 14DM per month. Last year, we raised kilometers fees. Then the people who drive long distances quit, because they can go to a normal car rental company. And the year before, we raised the time charges, and then the people going for short distances quit. So however you do it, you lose somebody.
DJ: You haven't found the best one to raise?
CP: Switch from year to year which you raise. Of course, every year you have to argue to get the increase. We said this year that the density of the stations is much better. People really have the station close by and the stations are really expensive. You have to pay for the parking space and the cost is there whether people drive or not.
DJ: What is the joining fee?
CP: It is at least 800DM and you get it back when membership ends. And yes, we raise that as well. We tried to raise it to 1300DM once, so we could get rid of debts. But this was too much for people, no one joined. A new member can pay 800DM but gets no interest on his deposit, or he can pay 1300DM and get 3.5% interest or if he pays over 1600DM he gets 4.5% interest. In the mixture, some people have that much money, and one doesn't get those kind of interest rates elsewhere.
"They are members because the just want the possibility of using cars."
Below: This carsharing station of two cars is located near apartments, offices, grocery stores, a bus stop, and bike lanes. It is powered by a solar electric panel, and includes a rainwater collector for washing your hands, and a lock box with child car seats and roof racks.
"We have 31 stations now in Berlin, and at every station we have one participant who takes care of the cars."
DJ: How did you first begin working with insurance companies to do this? What was the system before and what is it now?
CP: This is not very difficult. In the beginning, it was the same as a car rental so they knew that system. We had to pay the same fees. And after some years through the European CarSharing Association (ECS), we managed to deal with them, so that we can take over the private insurance contracts of the people (participants) which is much cheaper. So we pay very little now. For the insurance company it is ok because the accident rate is much lower with our people than with car rentals. Of course, the insurance is lower as well so you don't have to pay much. So it is not very complicated.
DJ: I know with Auto-com Quebec, they used a local insurer and got a per kilometer rate, so they only pay when the cars are being used.
CP: That is not possible in Germany. The industry is very regulated.
DJ: Do you have all new cars?
CP: Yes. After 2 years they get sold. In the ECS car-sharing standards, you have to keep the cars for more than one year.
DJ: We are creating a North American CarSharing Association [NACSA]... (GB:) So, what is European CarSharing organization's (ECS's) history?
CP: ECS was founded in 1991 in Switzerland. At that point, car-sharing was much stronger and wider in Switzerland than in Germany. And now we have 35 organizations that are members in ECS. They come from Switzerland, Austria, Germany and the Netherlands. ECS established ecological and social standards for car-sharing. User control of the car-sharing corporations is fixed in the standards. So you have to do this. We did this, of course, to exclude Avis. We knew they would never do it. ECS wrote the International Standard Organization (ISO) to define what car-sharing is and we will fix it so that you must have user democracy. If we can do this, Avis can't say they are doing car-sharing... and car-sharing is pretty famous right now.
Normally ISO is for products not services... now it is open for services, as well. We tried to come with ECS standards to the ISO. Now we are the most advanced car-sharing organization, so maybe we have the power to come in and really establish an ecological standard not just a financial standard, not just a service definition. Normally services are described by how you do them, but we want to describe the ecological or social issues.
"For the insurance company it is ok because the accident rate is much lower with our people than with car rentals."
DJ: We'd like to adopt your standards...
CP: Of course. It says in our ECS standards.
1. You have to keep the cars for more than one year. So you cannot become a hidden car selling organization like Europcar, that just takes the cars and sells them after 6 months. It is owned by VW, and Avis is owned by Opal/GM, so they are just selling organizations. They never earn anything out of car rentals. They buy for 30% discount off the list price, and after half a year it is still worth the list price and then they sell it. And we don't want to do that so you have to keep the cars for more than one year.
2. You have to have user democracy.
3. You have to allow hourly rental.
4. You have to charge for every kilometer or every mile. You can't say 500 km are included in a price which is normal for car rental agencies...
The ECS did other things: like make contracts with the insurance companies and make a contract with Opal-GM for buying cars at better rates. And ECS communicated with people like you in the US, Scandinavia, Japan and all over to spread the idea. The first aim of ECS is to spread car-sharing. And we had the contract with the railway system for an ACTION WEEK in Germany. This was a contact to other mobility systems... another important aim of the ECS. We want to do another ACTION WEEK in Autumn 1996 again with the railway system, but this time not only in Germany, but in Switzerland, Austria, and the Netherlands, all in one week. The railway companies are interested and they will finance it again.
Using cars from other city [car-sharing] groups was organized from the beginning. For every user it is important. We are not a big company all over Europe like Avis. We are local. It was not so easy because of insurance... so we built a special contract with a lawyer. Members do this very often. They call us and we make sure the car is waiting for them in the other city. The billing is done via the companies, not via the user. So if a Berlin user wants to drive in Cologne, he phones us and we fax to the Cologne people saying Mr. X is coming. He drives the Cologne car and the Cologne car-sharing group charges STATTAUTO Berlin, not him. Wecharge him, because we know him. If he doesn't want to pay, we can do something. Cologne doesn't know him and it would be very difficult for them to reach him and get the money. And for the consumer/user, it is better to pay it in the normal bill. He has one mobility bill with the railway tickets, taxi rides, and the use of the car in another city.
DJ: How do users pay?
CP: Most users allow us to take the money from the Postbank or bank. If they don't, they get a normal bill. It is not a big problem because we have 1000DM of theirs [the deposit]. We always have something.
DJ: If they don't pay, their membership gets cut off and you take it out of the deposit?
CP: Yes, of course. Next time they want to call, the reservations people tell them they are no longer a member.
DJ: How do you take care of the cars?
CP: We have 31 stations now in Berlin and at every station we have one participant who takes care of the car. He fills out the kilometer sheets and sends them to us. He washes the car weekly and looks after the car. He is a participant who lives very near, so he can look when he goes shopping or something. And he gets a little money for that, 60DM per month per car. He has a list every week of what he has done, and he looks after the oil and all that. When a car has damage he just phones us. Twice a year, he brings the car to a garage for a general check-up. He is not to do much, but he is there to inform us. And we pay him directly, we don't take it off his bill.
DJ: How often are the cars stolen?
CP: Very seldom do our cars have accidents where we don't know who was at fault. We had one car stolen. It was stolen by a member. We know it, but it wasn't possible to prove it. The border police saw him, but the thief said he had brought it back. We had the key. He imitated the key and then put the original key back in the box. So it was normal stealing to the insurance company. So we got the money. But we know he did it. So the car is in Poland, and we never got it back. Now it is better because we have this [magnetic] access control card, so you can't take the key without being known. So now it is not a problem.
DJ: How often are there accidents?
Every day ... no not every day. But at least two a week. We have 2-3 technical employees that deal only with that.
DJ: Two accident per week, isn't that overwhelming?
CP: We have 10 people working for us. The software helps a lot. You should have the software. And we send the cars to a garage, we don't repair them ourselves! There are about 150 movements at any time: safes, cars, sheets, station watchers ... In the first three years, we went up to 20 cars without any software.
DJ: What kinds of things are in the cars?
CP: Nothing. But you can get a baby seat or roof rack for bikes out of the station box near the car. At one station right now the station chief has to get these to the members. The city doesn't help much with space for these things.
DJ: Do you have work bicycles? Do other cities?
CP: Yes... two. Nobody uses them. We have 2 boxes for the workbikes, but they are not used very often. This summer, we are getting a third. We don't charge anything for them. They are good for shopping, but normally not heavy loads. Maybe they're good for open markets. People don't need them. They are pretty heavy things. All participants in STATTAUTO have their own bicycles with racks. It is too complicated for people to use the big workbikes. No other groups have bikes as part of their program. In Berlin, we have many grocery stores, so shops are never very far.
DJ: Auto-com Quebec has 3 different types of membership... long distance and frequent users pay differently. What do you think of that?
CP: I'd never do that for economical reasons. Because we earn our money with a mix. The most money we earn is from people who drive long distances. To take a car for one hour and drive 5km, we earn 5DM and the effort we have to make is the same as if someone takes the car for 3 weeks and drives 5000km. Short distances are just a service. It is a very important marketing instrument. Of course, because people are used to taking the car for 2 hours shopping, and because it is so convenient, they take us as well for holidays. Even if it would be more economical to switch to another rental company, people don't.
DJ: Auto-com appears to be telling members, if you go over a certain amount, you should switch to another company. What do you do with everyone wanting the car on the weekends? How do you limit use?
CP: Never put any limitations on car use. You want it to be as convenient as a private car. The virtual reality of a car is much more important than the reality itself. This is a virtual product. German cars are used one hour a day. I know it. German cars are used one hour a day and stand around 23 hours. But people really love it, to have it in front of their houses, not to use it but to be able to have the possibility. They really pay a lot for not doing, but for being able to do. As a car-sharing group, you sell virtual reality. You have to. This the worth of the car.
So, you never start with one car: at least two. Because when you have 20 or 30 people you have a better chance that the people don't always want to go on Saturday and Sunday because you'll have a mix of students and seniors and so on. The bigger you are, the better chance you'll have.
In the beginning, to avoid the problem of everyone wanting the car on the weekend, of course you have to try to have contracts with companies, to balance. And so we have special offers: 20% cheaper than the normal price. These member companies can use the car from Monday morning to Friday noon, but not on weekends.
"These member companies can use the cars from Monday morning to Friday noon, but not on weekends."
DJ: What kind of companies join STATTAUTO?
CP: Bakeries, groceries, architects, urban planning bureaus, journalists. Mostly little companies working with 5-10 people, not big companies because they have their own cars. Small companies don't really need their own cars. For example, an architectural firm has to bring plans maybe, and then once a week moves something big. And we have another system, a price system to balance usage. It is cheaper in the morning than in the afternoon because more people have time in the afternoon. So poorer people, who may have more time, do their errands in the morning.
DJ: How did you approach Opal/GM to get a discount?
CP: We checked all the dealers in Berlin for the best discount for buying 30 cars a year. And we went with the one that gave the best rate. By chance most of the car-sharing organizations in Germany came to use Opal. Opal builds some cars that have weak motors and therefore are more ecological than other companies. When there were so many car-sharers using Opal, we got a general contract discount up to 80% of the price. We buy 100-150 cars each year in the German network.
GB: Can people outside Germany use the German network's relationship with Opal?
CP: No, because of import/export things. Maybe Austria, because it is in the European Union, but not Switzerland. Austria only has 25 cars so they can't reach the same discount. They are in 10 cities, including Salzburg, Vienna, Graz, Linz and Innsbruck. But in Switzerland, car-sharing is very strong.
GB: When you help new groups start-up, what are the common problems, and solutions?
CP: Now when we establish a new group it is very organized. We have 4 things to offer:
1. Computer software. We go and install it and teach them to use it. When you teach the software, this covers most of the problems.
2. Safes with electronic access control. We explain how it works, how to repair them and how to use them.
3. A box of 100 formulas, contracts, everything written down, everything you need for the people and the organization. So that you have control lists and everything you need.
4. Teaching. Three times for 3-4 days over the course of 3 months, we go and teach them. So you have 2 phases, one pre-start and one starting. So after 10 months, the thing runs, and they learn how it works - parking spaces, insurance ... and it works pretty good.
In the beginning, we couldn't offer a real schooling or teaching because we ourselves didn't know how it worked. So we just went there one afternoon and explained how to do this and that, and then they had to have their own experiences... so it took them 3 years to get running.
We had to invent everything ourselves. Two parts: 1. marketing, 2. Financial, inner workings, control. Car-sharing organizations must know that they have to reach car usage of 50%. If they don't, they can't do it. We have to teach controlling, how to make contracts with the insurance, how to buy the cars, how to affix the logo, how to speak with the station chief that looks after the car... And the other part is how to go the public: convincing people to sell their cars and join is a special mixture of political, ecological, and economical reasons. Tell them that they use the car only one hour per day and it's cheaper to have a collective car. It is important to do say this in the right way, with not too much political and ecological reasoning because people don't want to hear it. They are interested in money. So you have to tell them something about money.
In the beginning, we made this mistake because in our heads, ecological reasons were the most important. We weren't interested in money. Then we realized we could reduce traffic with this system. You need to have markets if you want thousands of car drivers reducing driving.
So we changed a bit, we reduced the number of ecological and political arguments. In the recent leaflet you can almost read very little about ecological reasons, just that STATTAUTO is convenient, STATTAUTO is cheap, STATTAUTO is better for everybody. In the older ones we said how pollution was killing people and forests, how many tons of pollution every year ...
I think it is very important to train a group to the right arguments because normally idealistic people start car-sharing. It is hard to get this into to their heads. Many did not want to surrender their ideas in favor of using the market to make it work. There are so many grassroots groups that hope to convince people by telling the truth. But truth is cheap ...
DJ: Is there a point when you have to tell eco-people that STATTAUTO is still eco? Are there environmental groups that don't think car-sharing is environmental?
CP: Yes, there are some who don't want to support STATTAUTO. The Berlin Green Party says they don't want to support STATTAUTO because we are dealing with cars. We tried to tell them, they are naive because car-using isn't a phenomenon they can just deny. It doesn't help to deny it. But we can't convince them.
There is a more realistic wing of the Greens in other parts of Germany. In Berlin, we have a more fundamentalist wing of the Greens. They say that with our system there are people who join who couldn't afford to drive a car before. But many scientific surveys really have proven that some people who couldn't afford a car join, but there are so many people that sell their cars that there is a benefit. One STATTAUTO car pushes 5 cars away.
"Collective car use is the modern form of car use, when there is good public transit."
GB: Now, when you campaign, how do you explain STATTAUTO?
CP: Collective car using is the modern form of car using where there is good public transit. Collective car using is the modern form because in cities, cars are used only one hour a day and are standing around, using space 23 hours a day. And so, it is possible to have more people using one car without any reduction in their mobility. Then it is so reasonable, we are convinced that people will do it.
The problem now is not that everyone wants to own a private car but that he wants to be able to use the car whenever he wants. So he owns the car to get the possibility of driving. If we guarantee the possibility of driving without the car-owning, then I think this is the key to reducing car traffic. Because this gets rid of the emotional contact of people to their cars. And I think this emotion is not strong enough to hold the private car owners to their cars. There have to be rational reasons for breaking the relationship, so we offer the same opportunities as private car ownership. With the emotional contact gone, the irrational use of cars will be weakened.
Well, we have the experience of more and more people really being interested in collective car use. Because there is no reason to own a car if you have the same service without, and it is cheaper, and it is ecologically conscious. People in Germany are becoming more ecologically aware and say "I'd rather do something for my kids than living in such luxury that I always must have my own car." I don't know if this is important in the US, but here it is. The Green Party is in third place here. In 3 years, when we have the next election, I'm convinced there will be a red-green coalition government. Then we will have laws supporting car-sharing and reducing car owning, or raising taxes for car owning. So I think this is the future.
Well, it has to be the future. If we organize our mobility for many more years in the way we do, we will really have tremendous damage, global-warming storms and acid rains. This year the Rhine flooded with billions in damages. It will be the same effect in the whole western world, I'm convinced. So, it is very good to reduce traffic by collective cars: otherwise, if you say we have to forbid car owning or things like that, the lobby is so strong against it that you can't win. But if you say we don't want to take your mobility, your car driving, but we only want to organize it better, then it is a real offer. You always win if you start with an offer.
Car owning is pretty expensive, is the point. Of course, millions of people would never break this strong contact with their car, and you can never reach them. But you can hope. Private cars are very neurotic things in our communities, and you can only hope neurotic behavior will weaken. You can't solve those problems, but you can tell people it is not so important and after awhile they say they don't really need one.
DJ: Is it true that there's a full-time car-sharing promoter in the Dutch government?
CP: The state did a lot to help car-sharing there, installing the thing, making surveys, and everything. But I'm not sure they did it in the right way because when the state becomes interested in something, you have at least 50 institutes that want money and don't want to do anything. They just want to write things. We don't need people to write things! We need them to organize some things! Nobody does, so the movement there is pretty weak, but the flow of money is pretty strong. So something is wrong.
DJ: Would you prefer to not have a national German coordinator of car-sharing?
CP: The government should do something, not give away money. A law that gives car-sharing cars free parking spaces. They can do it. The city government could do that. The argument for that is, that taxis have reserved spaces in the public street where they can stand and wait for customers. We argue that car-sharing is very similar, its just taxis without a driver. The whole structure is very similar. You have to phone and you pay only for the using, not for the car. All costs are paid by the driving, which is the same for taxis. But you have a chauffeur, that you don't have with car-sharing. It is proven that it is ecological and very good for the traffic in a city. It reduces car movements and the parking space.
DJ: Bremen, Germany had a building development that doesn't require parking. They use a car-sharing car instead.
CP: Yes. They want to do this in Berlin. There is quite a big quarter in Berlin where if you want to rent an apartment or buy one, you will have to sign that you are not owning a car, otherwise you wouldn't come there. And there are no streets, just walking, biking, emergency access. Normal cars can't come in. There is a bus and subway station there and if you can't manage without a car there will be a car-sharing station nearby.
DJ: Is this available?
CP: No, it is built in Bremen. 200 apartments. But just planned in Berlin and Tübingen, where the French troops moved out and now they have the space for about 5,000 apartments.
Interview with Markus Petersen,
Chief Financial Officer
GB: How do you calculate the number of cars that will meet the demand?
MP: The most important point is experience. We have data about the last 4 years from which we can see how the firm's capacity developed. We have the hours in a day that the cars were booked so we know a lot about the relation of the members to cars. We have a very important season: the better the weather the more people drive. Also, people need STATTAUTO for rides on the weekend to transport big things that they can't move with bicycles.
STATTAUTO's money comes from the spare time events, like barbecuing out of town. We know how holidays effect the firm, a very important thing. We learned the learning curve/function - the longer they are a member, the less they drive. You have a participant who had a private car, where driving more didn't cost much more. So they are not educated by money. So what happens is they get our first invoice, and it's very high. It depends on how much property they had in other cars before joining, whether they owned a private car, shared a car, rented cars or only used taxis. The higher the investment in car property, the more they drive. In the beginning with STATTAUTO cars there is more of a learning effect. Every drive or every ride is listed, so they begin to think, "this car trip was not necessary, we could have taken the train" and "this other trip was not necessary, we had a bicycle". So they begin to drive less. So this is very good for the environment, and not bad for STATTAUTO.
What we do is just run more people per car. So we began with 12 people per car. That was an average number for the first year. Today we have 25 people per car. This is why it is very important to know about the learning function. This function is not homogeneous, it is changes because participants learn a lot about preventing transport, preventing the buying of services that are far away, say 10 km. They don't do that anymore. They get another store. What they don't like to reduce is spare time rides, so there they learn less. This is bad for STATTAUTO because the business structure has to adjust. Our problem is that people drive only on the weekends, because they learn to prevent driving during the week. Therefore, we need other people ... so we give a discount to businesses on weekdays.
The Art of growing a car-sharing firm is to plan for:
1) the annual season, 2) the holiday season, and 3) the learning curve. And to plan for growth. That is Carsten's problem: as marketing boss, he has to bring in the people. He must say that $50,000 will bring 1000 new members. That is the goal in his department. He has to do that. And I have to make sure that the number of cars grows only with heavy use. My goal is that the cars get used 12 hours per day. Normally, we reach our goals. In 1995, Carsten was suppose to bring in 1100 people. He is almost 3 months ahead. I've had better years. Last year was very good. 1994 was very good. 1993 was not. We broke even. We haven't lost money since 1992. That's ok. We are financially balanced.
GB: How do you structure prices?
MP: Price policy is planned by the management, in this case, Carsten and myself with the input from employees. Then we have a very complicated and a very good semi-democratic process for implementing new prices. The firm needs to be financially balanced, stable. It doesn't have to make profit but it has to be stable. You have to differentiate prices, and the other problem is how to finance the firm. Where do you get the money to buy or have 140 cars, or to finance the office?
The first problem: price structure. We propose to the STATTAUTO Verein [membership consumer union]. GMBH is the corporation... we are sitting in the GMBH's offices. The Verein doesn't have any money, it has some number of members. Participants can be a member in the union. When participants want to control the corporation, they can join the union, but they don't have to. As long as they think everything is wonderful, the prices are ok and the service is good, they don't have time to be a member of the union, don't have time to go to the general assembly meeting, and don't want to be a Verein member.
So now we have 500 members of the Verein and STATTAUTO has 2800 participants. So we propose new prices to the Verein. The Verein has a board and we have a contract with the Verein. The board controls the STATTAUTO corporation, that means that there are no secrets concerning the performance of the firm. The monthly statements that the computer gives are sent to them. They know as much as I know about financial stuff. They may not pay as much attention to it, but they watch over to make sure there is a balance. That the firm is stable. The Verein makes sure we don't lose the money that they gave us. With these numbers, we can always argue for price increases, like "the insurance has gone up", "we got more cars", "we have a new, more expensive office", "the salaries have gone up", etc.. They see the point. They don't want us bankrupt. So we don't have fights with them.
Now we come to the second part: how to finance the firm. In Germany, you can do it with the cooperative, but this is very slow. You have a general assembly which is very powerful, which is the capital. They are the capital and can kick management out. In our model, they can't.
A general assembly of 2,800 people would be a very slow body. If you want something new like a new product, or you want to save money, or you want to invest something, or have a new campaign, or you want to plan losses in the firm. You want to say next year we are going to lose money and it doesn't matter because after that improve because of this and that. To explain that to a risk-averse body is almost impossible. They are cautious, don't want to invest their money in something they don't understand because they don't know what is happening. They only meet with the general assembly one time a year. So, firms with this structure get very slow. We have colleagues that have this problem. They have management that always wants to do things, invent things and grow and get rid of private cars. And they can't do things because they don't have the power to do them.
So we say we have no information deficits because the Verein knows everything. They can ask as much as they want. Every day they can come and say lets have some control here and investigate some numbers. But they can't interfere with decisions. Therefore management is very strong in STATTAUTO, and the firm grows a lot. We are the fastest pace firm. So, information must be available, but the decision-making process should not be with the clients. The clients want to buy a certain service. They like the service. They like the idea that someone controls the management, that their money is safe and the profits allow us a little reserve for the years that we make mistakes and lose money. You don't want to go bankrupt because of a little mistake. They see that point.
Just two weeks ago, we had the annual meeting. So we increased the monthly membership fee and they didn't like that. Because they said we pay money monthly and we don't have any service for that as long as we don't book the cars. This isn't true, because they have the feeling that they can book the our cars at the next corner. It costs a lot of money to have this possibility. So they finally saw the point and our proposal passed. So that's a little of how it works.
Concerning finances we don't have a big problem because they give us 1000DM per person. So we don't have any finance problems. In fact, we could have less money because the bigger the firm the easier it is to lease cars instead of buying them so sometimes we have too much money. In the beginning, when you are very small, you have the problem that you have 20 people and $20,000 and you want to buy the next car. Well, where do you have the next $20,000. You have to lease it. Nobody leases the car to you because you are very small. But when you have 100 cars then you can lease them. I can say give me 40 cars for the summer season; afterwards I'll give them back. Then I don't have the selling problem ... I don't want to sell cars. I want to rent them and administer them. We are specialists in car-sharing, not dealing. I just sold some, but it is not our business in fact.
DJ: How were the tasks divided in the beginning?
MP: First I began alone. I wrote a dissertation with STATTAUTO as the experimental, empirical part. So I just bought one car and to administer one car is not that hard. Everyone does that with their private cars. I had the administration of the members too, but there were 20 members so it wasn't too bad. And then we had to invent all these things, especially for example the computer program, which is a very special car-sharing program. And not only that, how to found the firm ... well we had to invent that like every employer. So the problem was not how to divide the work. The problem was and is always for STATTAUTO to get the normal work done daily, to pay everybody and on the other hand, do all of these development things, plus public relations.
Carsten, for example, this morning, first had the national TV here for three hours. Wonderful for STATTAUTO, but three hours? Don't forget that. Because the dailyprocess of the firm, he didn't do anything for it. He didn't get any members. Well, he gets members by TV but sometimes you have American or Finnish TV and you don't get any members. So the problem for STATTAUTO is always to develop things, and to present things, for such a small firm... The ratio of doing free work in relation to general revenues is very, very big ... We are much smaller or more famous than our revenues.
DJ: ... we've run into that problem in the US. The national media takes up too much of the firm's time in relation to the small return that generates for us locally.
MP: Yes, it takes too much energy. Yes, when it gets to this point we always say it is better to stop attending to the media. Because, for example, ADAC, the German equivalent of AAA, after a year, the media went to them and said why don't you do car-sharing, you are much bigger. ADAC said it doesn't work, it doesn't even exist! They are so powerful with the media that the media wrote, "STATTAUTO doesn't exist." This is obviously not the case. We had maybe 10 cars. We were a very smallfirm, but we existed...
So now, after 7 years, they say in Berlin, "STATTAUTO exists, but they are not professional, they are alternative, crazy guys..." So, in fact, it is very important to do media. If not, they will lose interest after a certain time and write you off as crazies. They will say that private cars are the only ones that work, it's been a hundred years and it works. So we always had these times when the media was pushing us, and sometimes we told the media to go away.
DJ: You need time to grow the business.
MP: Yes, it is very important to keep the business going. The media is not that important. It is very important to grow, but don't overdo it with the media, especially in the US! In Oregon you're not interested in members in Texas obviously.
"So because the media power of Greenpeace is something, we had 750 new members within one month."
DJ: How do you handle this quick growth? Carsten said recently 430 people signed up at the Climate conference?
MP: Yes, that was good. We did the same thing last Fall. We had 750 people in one month. They were "testers". They tested the firm. Most of them left the firm afterwards. 300 or 270 stayed. That was because they had to pay an entrance fee. At the last conference, the Climate Summit, we didn't have that problem because waived the entrance fee. We said well, during the Summit conference, you don't have to pay the entrance fee. Therefore, we had this wonderful success and we handled that easily. Then it's mainly a thing of planning the cars. Well, we were overloaded, some people didn't get any cars. That was a problem.
The infrastructure of the office handled it, some additional people, not a big problem. Everybody was a bit overworked, but then we said afterwards everything will be a bit better. We are going to have more money if we can administer these people. They will give us money because they'll rent cars. And now the service in the firm is much better because we are able to lease an extra 30 cars for those 450 people. So this season is going to be a perfect season for the clients. Much better than the last ones because the firm is so big that it can lease these cars. Last year it couldn't.
In the summer last year, they didn't get any cars. We said we're full - not very good service! This summer is much better because we got 450 people in one step, not gradually. So now we could buy or in this case lease cars. Normally you could rent, but in the summers we were overloaded. This year for summer it is not the case, we can for 10 weeks lease another 20 cars.
DJ: Is there minimum time that members must remain?
MP: No, because of the good experience of the "testing" experiment. The "testers" were through Greenpeace. We did not make a campaign. That was a success because Greenpeace said officially in the public, they said "CarSharing is great, test it. We have a deal with STATTAUTO that you can test it. You just pay when you use the cars. You don't pay a membership fee. You don't pay an entrance fee." So because the media power of Greenpeace is something, we had these 750 people within one month. That was really incredible, we had an extra office, we had an extra telephone service firm to handle the calls. That was great. So they tested for 30 days.
So like one guy would enter the first day, September 1, 1994, when the campaign began and he could test for 30 days. After that we would write him a letter that if he would like to stay, he would have to pay the entrance fee. If not, he would just call us and send back the Mobile Card and then we wouldn't take the amount from his account.
So after that good experience, Carsten and I changed the policy. We said, "Everybody who wants to come in can test it for 30 days. For 30 days, you don't pay an entrance fee. You don't pay a membership fee. If you like the firm, if you like the product: it worked, you got the car, the car was clean, it was ok, people were friendly and so on, then you stay obviously and then you pay the entrance fees. So after the Greenpeace campaign, we changed the policy last month (April 1995). That is very good, I recommend that.
DJ: Are a lot of people taking you up on that offer? Or are some people saying I don't want to test it, I just want to join?
MP: It is very new. It is only 30% or 20% of the people who are coming to the information evenings here that say ok I'll test it. Most of them, they have already decided. They say "we've waited 2 years, we now know because we have so many friends that are members that we go for it. We'll stay anyway, so here, you have the fees."
DJ: Who runs the informational meetings/evenings? Employees?
MP: Yes, employees. Carsten and I did it for the last seven years, but now we have somebody.
GB: You started with old cars? How did you manage to jump from old cars to new?
MP: It's in my dissertation, let me show you. You should have a copy of this... It is a wonderful book because everything I'm telling you is in here. It's not available in English. Here you have development of members, car, revenues, balance sheets and profits. In our first year, 1988, we had only one car and in 1989, we had 3 cars, 40 members and then it's here in quarters.
As first we thought old cars were right. We don't have any money, so we'll buy cheap stuff. It was funny, when I founded the firm, I bought a car. It cost 2,800DM. I bought a computer for 5,000DM then I bought an answering machine. In Germany, answering machines were very expensive and it cost 2,000DM because of the Tele-com monopoly. So I had 7,000DM in information systems and 2,800DM to make the money, which is a crazy relation.
Now I don't know, we have 2 million DM in cars and maybe 200,000DM in computers. That is a better relation. Then it was funny... Back then, one time the brakes didn't work, but luckily I was driving the car at the time. That was very bad service. We sold the car at a profit for 4,000DM. ... when the wall came down and all the prices went up all the East Germans wanted to buy wonderful western cars... the prices went crazy and we sold the car, and that saved the firm in fact. We sold all of our used cars because the prices were crazy in those days. They value just doubled. And so that saved STATTAUTO because we had so many losses and the firm was too small to take them. I was giving up because all of my private money into this stupid STATTAUTO. Anyway, we saved it with the wall coming down, so the communists they saved us, and afterwards we bought only new cars.
We then had this argument. We said, "There is a big difference between members and people who are not members." Important for you are obviously the people who aren't members because they are the majority. People who still drive private cars...
What you want is not the low-budget student, you want the people who have the private cars because they are the guys who produce the emissions. You don't want people who can't buy a car. So therefore, you have to have very good service -- 24 hour service with many stations. STATTAUTO is has many stations in Berlin now. We have a very good image. That means "it works", first of all. It is not a stupid idea, it works, that's the point. And we did that. That is the very good work of my brother that he pushed the point that STATTAUTO works. It's expensive, but it works. Cars are there. Cars are cleaned, new, safe. So people sell their cars, and they trust that STATTAUTO works.
You need all this to get people from the private car to STATTAUTO. With old, shitty cars you won't. Because people have enough money to buy nice private cars. They just don't like the idea of having to service a private car. Every 6 months they go to the emissions test or to the inspection at the garage, all this stuff. The gasoline price goes up, they get in a bad mood. With STATTAUTO, they just drive less. Insurance went up like hell in Germany, 50% in the last two years because of cars being stolen. So people don't worry anymore, and they just know they drive less with STATTAUTO.
What they like is the service. Some people say when you buy new cars that is bad because the production of new cars is greater. That is just wrong because it depends on how many cars you buy, what you do, and how long you keep them. We keep them two years. Normal car rental firms keep them 6 months. Why do they do that? Because they get a 30-40% discount on the new cars. Say the cars are very new, like if you keep them only one day theoretically: then you see it. You buy it with a 40% discount, you sell it with only a 30% discount, so you make 10%. That is how normal rental firms live. Normal rental firms are car dealers.
The production does not go up because somebody buys a new car. When you have a hundred Americans, and I think it is the case you have 100 cars. Well, everybody buys one car, obviously. Say person #1 buys all of these 100 cars because he has such a wonderful discount and sells them to the other 99, one day later. Car buyers will obviously buy it from the first person because they don't want to pay the full price from the manufacturer. They want the discount, so the production does not go up. But we take people away from the car market. If ten people use one car, you remove demand for 10 cars. You need new cars to attract more people to this system, then many less cars are made.
When car-sharing firms are big, they can say to the manufacturer, "well, we don't like," for example, "this metallic paint. It is an ecological waste." And also they will say we want cars that go 1 million kilometers instead of the current 100,000 kilometers until they break down. When you have market power, you will change the car. You will say we want a good car, not a throw-away car. We want cars to last for 50 years, saving resources. It is possible. No problem for engineers. It is just the market that wants every year a new model, and everything is thrown away. We should buy all cars and be the biggest car dealer, because then we can say which cars are on the market. That's how it works. Not people thinking, "we buy new cars and the production goes up." That is not true. VW or from Opal. They probably produce in one minute what we need in a year...
GB: How did you make the relationship for buying cars at a discount?
MP: Well, we were pretty stupid actually. The first thing you do is go to all the dealers in town. You write them a letter and say I want to buy two cars and who wants to give me a discount? And so most of them, they don't even answer, but now there is a big recession in Germany and so all of them answer you back. They will say, I will give X discount. Soon you will find out that the maximum is about 20% in Germany, and that is really the maximum using this method. It depends on the car: cheap cars get more discount and cars like Mercedes get less. Because you sell it after some time and the difference between the buy and sell price is the amount you have to pay. We said we have two cars to buy and ended up with Opal/GM. Actually, they gave the best discount. The car was ok for our purposes.
And so we did not have a liaison with GM. It just gave the best discount. So then with all the media coverage the cars were getting, we told Opal, you need to give us an extra discount, because we are improving you image. Because STATTAUTO is concerned with being an intelligent and ecological product, and it is connected to Opal only because you gave us this discount. Any day we could go to VW, no problem, so they gave us an extra press/media discount. And then it turned out that I should have done that in advance! But you never know. Now, we are serious so they talk to us. Five years ago, nobody talked to us.
Recently some people came that were part of a group of firms buying cars together. It's like a buying cooperative for cars. They get huge discounts. And they said when we become a member we can have them too. So I said, wonderful, no problem, because I don't have a problem with getting a discount from the manufacturer. The manufacturers didn't like that very much because now we can buy all cars with these wonderful discounts. So that shouldn't be a problem. I am sure that these buying cooperatives exist in the States. Because all firms that buy 50 cars a year, which is nothing for a big firm, they have that problem. They want to buy at a discount, so they have these groups.
Below: Berlin's large sidewalks contain clearly marked bike paths. Different colored pavements show bikes which space is theirs. Bikes often get their own traffic signal.